Sunday, May 30, 2004

There is no end to the end of the world scenarios spun out by and for the small minds of the little bourgeoisie, academics, pseudo-radicals, and once-upon-a-time socialists. Whereas revolution requires imagination and audacity, reproduction of the status quo in all its increasing depreciation can produce no more than nostalgia, repetition compulsion, and ecclesiastic extinctionism.

So the once and future king of the end of world, the emperor of scarcity, Malthus, is dug up, dusted off, dressed up and paraded about as the dismal scientist, dyspeptic Einstein of the dismal science. Malthus, Hobbes' accountant --all exchanges are nasty, brutish and short. Malthus the borscht belt comedian-- "The food here is terrible." "Yes, and such small portions." Malthus, Keynes' inspiration-- "In the long run, we're all dead."

It's always the same, and it never ends, variations on the theme: The world is running out of food, the world is running out of oil, the world is running out of water, the world is running out of....most of all, the world is running out of time. That the world is a social not a natural organization, that the world is a specific economic organization based on a specific property form requiring a specific organization of labor is not of significance. It is the world as such, people as such, oil as such that is the shortage/overage. It is the end of the world, the end of food, the end of oil that is always just around the corner. Dread and terror are the true offspring of fear and greed.

The little bourgeois always confuses the mundane and the spiritual, the profane for the holy, and his or her immediate ignorance with universal truth. Heaven for the bourgeois order is a place where the rate of return never drops, so it's clear that a decline in the rate of profit will be produce reports that the sky is falling.

This time, same as the last time, Malthus in his guise of petroleum engineer has agents of panic proclaiming that the oil has run out, the natural gas is gone, and the world as we know it is about to come to an end. Curves and peaks are proclaimed for production where curves and peaks do not appear. "Reserves" are depleted. Absolutely....., although the reserves this year are larger than the reserves the mini-Malthusians stated were absolute 6, 7, 10 years ago. The "peak of production" is just around the corner, this year, although that peak 6 years ago was predicted to occur 4 years ago... and if it's not this year, then surely the peak will be next year..or ten years from now and if not then 30 years from now. What difference does it make? The sky is falling.

The little bourgeois mini-Hubbertist-Malthusians have a problem. And that problem is economics. Economics is nothing but a social relation of production, a form of property, a specific organization of labor. The trick, and it is a trick, to Malthusian and bourgeois economics, is the disavowal of private property as a social relation. Rather private property, property that demands the organization of labor as wage-labor to give it life, to reproduce its existence as a form demanding wage-labor to give it life again, is a natural function. Then all limitations, failures, shortages are natural in origin. Property in all its purity is preserved, it's humanity in all its gruesome impurity that must go.

"Reserves" have peaked, claim the HubbertMalthuses. But reserves, proven reserves, are not a natural category. In their very origin, very definition, petroleum reserves are an economic function, an accountant's line item entry. No kidding. From the American Petroleum Institute: "Companies whose publicly traded securities are registered with the Security and Exchange Commission (SEC) also report proved reserve information under the requirements of the Financial Accounting Standards Board (FASB) Statement No. 69 (FAS 69), 'Disclosures about Oil and Gas Producing activities.' This information is not part of a company's audited financial statements; however, the proved reserve quantities are used as a basis in the financial statements to recognize expense on the income statement associated with depreciation and depletion of a company's investment in proved oil and gas properties." Does any of this sound like nature? Like a geological limit?

And what is the SEC/FASB approved definition of proven oil and gas reserves? "Estimated quantities of crude oil, natural gas, natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions." In a word....Profitably. Does any of this sound natural?

Shell Oil's write down of its reserves was triggered not by any world wide decline in known petroleum reservoirs, but in changes in economic and operating conditions. Shell was caught using the Arthur Andersen manual of creative accounting to claim reserves it no longer had access to, license to develop, partnership and/or ownership rights. Does that sound natural? Well, cheating is natural to the bourgeoisie, but that's the point isn't it?

This inability to distinguish nature from economy, property from development, not only leads our mini-Malthusian academics and near radicals to see the end of the world where it isn't. This same inability obscures their ability to see the origin of capitalism, as capital, as a form demanding a specific organization of labor as wage-labor, where it really is. Instead, they identify the origin in "transfers" of "surplus," the extraction of precious metals, jewels; the inevitable growth of trade: everywhere and anywhere except where it really is and really was-- in the relation between the conditions of labor and labor itself. It is in that precise relation where the former survives only by reproducing itself through expropriating the latter, where each exists only as an element in the expanding reproduction of that precise social relation of private property and social labor that capital is created, and the real limits to the creation of capital are determined.

It, the origin and the future of capital, has never been a question of wealth per se. It, the limit to capital, has never been nature. It, the problem of capital, the conflict between the means and relations of production, has always been manifested in the problem of reproduction of profit.

Monday, May 17, 2004

As oil prices hit and maintain record prices, the US strategic petroleum reserves have reached their highest levels. Stocks now measure 659 million barrels, just short of the 700 million barrel capacity. With true business acumen, the Bush administration has bought high and bought higher with no intention of selling to lower the market prices. And it is true business acumen if your interest is in raising and keeping prices high; if your business net income increased 98.3 percent between 2002 and 2003 due to higher prices, due to a "scarcity" surcharge, a terrorism premium. Scarcity is nothing but terror by other means, and so the Malthusians, the oil depletionists, consultants, geological politicians, arms merchants all join hands in the struggle for "security," resources, and most all, a percentage.

The Hubbertists, living, are hard at it, breathing life into the Hubberts long dead. The mythological "bell curve" of production and depletion is reproduced as a proof of natural scarcity, rather than propaganda designed to obscure the real overproduction.

What global strategists label as a grand game to control resources is reflected, just as inaccurately, in the claims that the oil is running out.

It's not about resources, it's not about disappearing supplies, and it sure as hell is not about bell curves of production and depletion. The bell curve, like the unicorn, exists only as a fantasy. Oil production rates in most countries have not followed a bell curve of production increases and declines. North Sea production has actually seen two distinct peaks in production separated by a plateau
North Sea production has increased beyond and after the point when the new Hubbertists predicted the decline.

Moreover, proven reserves, as tabulated by the Hubbertists themselves now exceed the estimates of reserves the Hubbertists made 6 and 7 years ago.

So what gives? Scarcity, like terror, prepares and justifies the imposition of draconian austerity on the working classes, the poor. Scarcity, like terror, deflects attention from the real social, class, sources of economic distress. Scarcity's seductive appeal is its apocalypsism, its near religious and martial embrace of extinction as the ultimate, final, and only solution.....except for the rich.

Sunday, May 16, 2004

When that putty faced hack, the living Dorian Gray of US finance capital at the Federal Reserve Board spoke of "irrational exuberance," he thought he was referring to a specific phenomenon in the US financial markets and not a congenital defect. The man who gave entire new meanings to the word "equivocation," who has made a career of presenting ignorance as erudition, never knew how close he came to the truth, how he close he came to half the truth, which is as close as even the brightest bourgeois can get, and Greenspan, believe me, is not the brightest.

But irrational exuberance is only half the truth. Unrelieved despair is the other. And the two halves do not make the whole. The whole truth is the organization of despair in exuberance, exuberance in despair, fear in greed, greed in fear, concentrated wealth in general poverty, private prosperity in social misery.

The source of both, of the whole, is the expropriation of surplus labor; the transformation of wage-labor into profit. This process begins, can only begin, with the separation of labor from the instruments of production, can only be maintained through reproducing that separation in the continuous expulsion of labor from the production process, and thus reproduces itself only in part by undermining the reproduction of the whole.

Between 1950 and 2000, US manufacturing output expanded 600 percent, while manufacturing employment declined. As a portion of GDP, manufacturing declined by half between 1960 and 2000.

The current exuberant recovery of the US economy compresses that trend into a 4 year time frame. Manufacturing employment has declined some three million while output has increased.

Trucks and semiconductors, the bellwethers of the US economy, define the parameters of the expansion. Intel has invested more than $10 billion in 300mm semiconductor fabrication plants. Without increasing manufacturing employment, the 300mm fab plants yield 5 times the chips of the 200mm plants.

Navistar, capitalizing, and I do mean capitalizing, on UAW give backs has introduced a two tier wage and benefit system while reducing labor inputs. The average elapsed time for truck production has declined by 40 percent in 2 years. Said the CFO "If we had not been able to squeeze out the labor, we would have had to go someplace else." The someplace else is where labor is also being squeezed out.

The exuberance begins in the accelerated extraction of surplus value in each particular, private enterprise of the economy. The despair begins in the decelerating realization of that surplus value as profit for the enterprises of the economy as a whole. The spiking of oil prices is both the beginning and end of exuberance and despair-- an index to the difficulties in the transformation of surplus value into profit, and the reproduction of capital as a whole.

Two and three years ago, capital suffered from a paralyzing overabundance of trucks, semiconductors, steel-- leading to the shuttering of fab plants, bankruptcy of steel manufactures. Today there is a "shortage" of steel, a booming market for trucks, and semiconductor plant utilization rates at new highs.

Profit losses after the 2001 collapse erased the profits booked from 1998 forward. The five year annual return of the S&P 500 stands at -.2 percent.

Saturday, May 15, 2004

And it's more than just the wolf... Oil prices have crossed the critical price threshold of $40 per barrel, and the huffing and puffing you hear is the house starting to come down.

First and always, the shock is manifested in the interest rate sensitive sectors. The money made from the instruments of trading in money, the derivatives of the derived, has is not so much the canary in the coal mine, as it mayfly. Every breath drawn, and cut short, by the change in basis points. JP Morgan's emerging market index dropped 5.5 percent in just 3 days. Trading in emerging market debt instruments, both corporate and government has evaporated. Russia, 2004 as in 1998, appears as the dream gone to nightmare. This time it's Russian corporate bond market losing liquidity, with the debt instruments themselves drying up and turning to dust.

So it was just yesterday that all the bankers' men and all the bankers' women were praising the remarkable turnaround from the dark days of the GKO default, and it's just tomorrow when the oil spiked turnaround turns around into its opposite.

But if Russia give dread a form, China gives it content. An economy so uneven, so combined, with agriculture in ruins, unemployment at 200 million; an economy of import and re-export, of overconstruction, overproduction, and underdevelopment all at once, it is China that will give new meaning to the word bubble, and the term collapse.

So let's get to the part where we get to look back and say "I told you so." The upsurge in US profits, predicated upon the increase expulsion of labor from the manufacturing process, is exactly that overproduction that precipitates the decline in the rate of profit. Overproduction works its way throughout the world market in many guises-- price rises, apparent scarcity, demand acceleration, interest rate rises... The different facets of this process converge on the need to destroy the instruments of production and the living standards of the producers.

2004 will remembered as the year of this convergence, and the year when US elections are cancelled, suspended, suppressed.